Record $2.75 billion in New Mexico revenue driven by oil and gas industry

The New Mexico State Land Office reported Tuesday a record $2.75 billion in revenue for Fiscal Year 2023, which ran from July 1, 2022 to June 30, 2023.

This was the second time in its history the land office raised more than $2 billion, read an announcement, reporting revenue of $2.4 billion in FY 2022.

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Of the funds raised in FY 2023, records show about $2.6 billion, or 96.8 percent came from oil and gas sources, including royalty payments, rental fees and other costs paid by oil and gas operators to produce on State Trust land.

That percentage was unchanged from FY 2022 but grew significantly in the last 30 years from 86 percent in FY 1993, increasing almost every year since.

This is likely driven by the Permian Basin’s rise in recent years to become the U.S.’ most active oilfield.

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The Permian, straddling southeast New Mexico and West Texas, was forecast to generate about 6 million barrels of oil per day (bopd) in January 2024, according to the Energy Information Administration, almost half of the about 13 million bopd the EIA expected the U.S. to produce next year.

The Permian was also a national leader in natural gas production, with the EIA ranking the region second in the U.S. at 24.4 billion cubic feet per day (cf/d) in production for next month, leading the nation in growth with 130 million more cf/d predicted.

New Mexico trailed only Texas in total oil production in 2023, with the EIA reporting about 574 million barrels produced by the state this year, while Texas had about 1.8 billion barrels this year.

New Mexico’s oil and gas industry was credited with leading to about $12.8 billion in recurring revenue in fiscal year 2024 and about $13 billion in fiscal year 2025, according to the latest state financial projects.

The report published by the Legislative Finance Committee also showed about $3.5 billion in “new money” brought in – an about 36.4 percent growth between the two fiscal years.

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State Land Office spokesman Joey Keefe said this growth could mean oil and gas will remain a key part of New Mexico’s economy for the foreseeable future, as other sources of revenue grow.

“Obviously, oil and gas still makes up a bulk of the revenue, but (State Land) Commissioner (Stephanie) Garcia Richard is pushing diversification so New Mexico’s school kids can get an even bigger piece of the pie in future years,” Keefe said in an email.

“I would point to the growth revenue in solar and wind energy and business leasing in particular.”

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He pointed to revenue brought in during FY 2023 from the wind and solar sectors, with wind growing from about $137,315 in FY 2015, the first year the Land Office reported the source, to about $3.9 million in FY 2023.

Solar grew from $384,062 in FY 2015 to $548,959 in FY 2023.

Keefe said the while renewable energy was “worth millions” now, it would be valued in the “hundreds of millions” in the future as projects under construction are completed and generate power and resulting state revenue.

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He pointed to a recent project by Pattern Energy that Keefe said will produce about $431 million in revenue over the lifetime of the project.

Garcia Richard said the Land Office was working to diversify its revenue, aiming to prevent the state from seeing economic strife should the oil and gas industry downturn in the future.

“We are constantly pursuing ways to diversify revenue sources for the long-term health of the institutions that benefit from state lands,” she said.

“Whether it’s providing affordable housing for seniors or approving large-scale renewable energy projects, we are open to business opportunities that can improve the lives of the people of New Mexico.”

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Stronger enforcement of state law on oil and gas operators in New Mexico also drove up revenue, Garcia Richard said, even as oil production grew.

“We have earned this money while significantly ramping up our enforcement efforts across the board, proving that appropriate oversight of industry and record revenue generation are not mutually exclusive,” she said. “In fact, they go hand in hand.”

Most of the revenue, about $2.5 billion went to public schools, records show, with other funds provided to New Mexico universities, hospitals and other facilities.

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on X, formerly known as Twitter.

This article originally appeared on Carlsbad Current-Argus: Oil and gas drives record $2.75B revenue from New Mexico State land